TRANSCRIPT
Of
SENATOR MITCH FIFIELD
Sky News AM Agenda
Kieran Gilbert & Senator Mark Arbib
13 October 2008
8:30am
E & OE
SUBJECTS: Economy, US election
KIERAN GILBERT:
Good morning and welcome to AM Agenda. Our Monday panel, Liberal Senator Mitch Fifield and Labor Senator Mark Arbib. Gentleman thanks for your time.
SENATOR MITCH FIFIELD:
Good morning Kieran.
SENATOR MARK ARBIB:
Great to be here.
GILBERT:
Mark the Prime Minister described this as the economic equivalent of a rolling national security crisis. We basically saw the equivalent of a war cabinet at the weekend with his top advisers. This is consuming everything isn’t it?
ARBIB:
Extraordinary times. Who would’ve thought that what started in the United States 13 months ago with sub-prime mortgages has turned into a global crisis. You only have to look what’s happening overseas, G7, G20, crisis meetings that Kevin Rudd had over the weekend. This is a very serious situation. You’ve got the banking crisis, which is the first part, now on the flow on effects. The effects that are going to slow down the world and you’re going to see a contraction in growth everywhere and you’ve seen it in the United States, possible recession in the United States and a possible recession in Europe. No country is immune.
GILBERT:
It’s interesting Mark, I’ll get your thoughts on this Mitch as well in a tic but Mark firstly, on the campaigning, if you look back at the election campaign last year and the issues that the Government campaigned on it’s fascinating how all of that can be consumed by something which is unforeseen by most and that is this tidal wave.
ARBIB:
Well during the campaign it was something which was talked about but it was only a US problem. No one thought that it could get to this level and I mean it’s amazing listening to economists, none of them predicted it could get this bad. So ah, yeah, it’s dominating the current thinking of the Government. Our job now is to get the country and the economy through these very tough times.
GILBERT:
Mitch do you think that the Prime Minister and the Treasurer have handled it okay thus far?
FIFIELD:
Well obviously we support the announcement of the Prime Minister at the weekend. It’s the right thing to do. We’ll give those measures rapid passage through the Parliament. And it is good to see the Prime Minister and the Treasurer governing rather than commentating for a time. The Government did get itself into some serious trouble early in its term through its commentary, through Wayne Swan talking up inflationary expectations, egging the Reserve Bank on to increase interest rates and to increase interest rates at just the wrong time. And I know Mark said that the situation we’re in couldn’t be foreseen, but that’s the business of government, planning for those things that you couldn’t necessarily predict. I think what the Government’s done is that it has totally, totally framed its budget the wrong way. Labor’s budget was predicated on not stimulating the economy. We know this because the budget’s own forecast for unemployment was for unemployment to rise. So the budget was totally miscued and I think it’s time that the Government admitted that they got that wrong.
GILBERT:
But you had the multi-billion dollar tax package and in terms of looking at stimulus in the economy, that’s a huge tax package, there were increases in the utilities payments for pensioners, then if you look at the scope for further stimulus there’s that $22 billion surplus.
FIFIELD:
Well there were those tax cuts which we authored, but the Government was boasting at the time of the budget that it was not a stimulatory package. They were saying that inflation was the issue of the day and that the budget was not stimulatory. So you’ve only got to take their words for that. They need to admit that they’ve got the budget wrong. They need to look at some stimulatory measures and I don’t think that the infrastructure program that they’re talking about is the answer because that has long lead times. They need to give immediate relief to pensioners. Give the $30 a week increase. That will put money in pensioner’s pockets today which pensioners will start spending.
GILBERT:
Okay let’s hear what the Prime Minister had to say, a little bit of what he had to say yesterday.
KEVIN RUDD:
If you are in the midst of the rolling equivalent of a national security crisis, I think everyone needs to understand that there’s gonna be a lot of bumps along the road. And it’s gonna be rough and it’s not going to be even, it’s not going to be smooth. There won’t be a magical response in the next 24 hours.
GILBERT:
Mark Arbib, Mitch made the point that the Government is finally governing. Has this crisis ironically given the Government a central narrative? Keating, a former Prime Minister, among others was critical of this government not having a sense of direction, telling people what its objectives are. Has this crisis given that to this government?
ARBIB:
No I believe we’ve had direction. We’ve been governing. I’m surprised Mitch says that. But what this is about is, there is a crisis in front of us and we’ve got to get the country through the crisis. And we’ll do that. That is something which Kevin Rudd is working towards. That’s something that Wayne Swan’s working towards. And just to pick up on something Mitch said in terms of the budget, I think we got the budget right. I think putting aside $22 billion in the surplus is a huge buffer that we can now fall back upon. You’ve heard Kevin Rudd say overnight this is something we’ll probably have to do. Fall back on this surplus to stimulate the economy. At the same time as that we didn’t ignore families, we didn’t ignore individuals. We actually put aside the biggest, biggest tax cuts the country has ever seen, $55 billion package and people are seeing the effects of that now.
GILBERT:
Do you think it’d be smart to have a mini-budget with that surplus in mind and increase the pensions as the Liberals are saying and other measures to try and help people get through this?
ARBIB:
Well the Prime Minister has said we will do something on pensions, but they’re waiting on the Harmer Review and that’s important because you just can’t do it in a slap-hazard way. You have to do it across the board and make sure that everyone gets some sort of benefit and that benefits aren’t taken away because the system doesn’t work right. So we’re looking at that as part of the Harmer Review. But in terms of a mini-budget well, couldn’t rule anything in or out at the moment, could you? But we have said that we are going to, we’ll look at stimulating the economy through the budget surplus so we have that to fall back on. At the same time as that, infrastructure, and Mitch sort of just pushed that aside. It’s a very important issue. We’ve got $76 billion set aside for infrastructure. We’re going to speed that up to ensure that helps stimulate the economy.
GILBERT:
That’s a fair point isn’t it Mitch?
FIFIELD:
Well there are extremely long lead times to infrastructure spending. We’re in a crisis at the moment. This is an economic crisis. And you need to make quick decisions. You need to respond quickly. And taking a quick decision on pensions would be one of the most direct things you could do to help stimulate the economy. One area where I will agree with Mark and with the Prime Minister is that Australia is in probably the best position of any country in the world to deal with this economic crisis. But what the Prime Minister hasn’t said is that the reason for that is because of two things the Coalition did. The first was to establish APRA, perhaps the world’s best prudential regulatory authority, it covers all deposit-taking institutions, insurance, superannuation, banks. The other is that we repaid Labor’s $96 billion of debt and bequeathed Labor a surplus. They are the two reasons why Australia is in such a strong position to handle this situation and it’s no thanks to the current government. Nothing that they’ve done over the past nine months has put us in a better position to face this situation. It’s because of what we did when we were in office.
GILBERT:
Okay well what about the handling of this? You say nothing that they’ve done over the last 10-12 months. What about the handling of this crisis though, the immediate? Rudd yesterday guaranteed all deposits in banks. This is clearly about certainly for the banks and the customers though. You’ve said that you’d back that though?
FIFIELD:
Indeed, because it’s what Malcolm Turnbull proposed last week. So obviously we back it. But in terms of what the Government did in its first nine months, what they did in the budget, they can’t claim credit for the strength of Australia’s regulatory arrangements, the strength of Australia’s budget position. That was something which was entirely the result of the former government.
GILBERT:
Mark, Mitch is right though, this was Malcolm Turnbull’s, well he proposed it first. The idea to increases the deposit guarantees. He did it on Friday. He also recommended that the Government spend more in buying mortgage backed securities to put more liquidity into the mortgage market as well.
ARBIB:
And he also got the banks to cut interest rates didn’t he? I mean Malcolm Turnbull takes credit for everything that goes on. He’s just trying to get himself cut into the media cycle, that’s my view of him. In fact Malcolm Turnbull is actually irrelevant in terms of this and the things that the Government has taken has been thought about for a very long period of time. But we’re in government, we’ve got to do what is responsible and we’ve done the responsible thing. And it’s not just in terms of having a $22 billion surplus that we can fall back on. It’s not just about the infrastructure it’s also about the guarantees that they’ve brought it. The guarantees for deposits, the guarantees to help banks in terms of their loans. But also to help those non-bank lenders. $4 billion has already been put in, another $4 billion to come which was announce overnight. David Liddy yesterday, CEO I think of the Bank of Queensland, he was out there saying that it’s a great thing and that their bank will be lining up because that will help provide confidence in the marketplace. And that’s what we need at the moment, to get through this crisis. We need confidence and we need stability and that’s what the Rudd Government is providing.
GILBERT:
Let’s hear a little bit of the Prime Minister yesterday at that news conference where he made that extraordinary announcement when you think about it in the context of the overall banking system. Let’s hear what he had to say.
RUDD:
The Australian Government will guarantee all deposits whatever their size in all Australian banking institutions for three years. Banks, building societies, credit unions. As Prime Minister of Australia, again, I am not prepared to stand idly by in dealing with the concerns of Australians as they watch global financial developments unfold.
GILBERT:
Mark is this a chance for the Prime Minister to, he describes it as the economic equivalent of a national security crisis, is it a chance for him to assert his leadership and to consolidate it?
ARBIB:
Well I think it has shown what type of leader Kevin Rudd is. He’s a strong leader. He’s taking decisions. But he’s also doing what’s responsible. On the interest rate cut last week, he had an opportunity to get in there and bash the banks…
FIFIELD:
Stand up for people with mortgages.
ARBIB:
…the low route which Malcolm Turnbull did, but he didn’t. Hang on mate. He actually did the right thing by the country, the right thing by the economy. It was a tough decision but he did the right thing.
GILBERT:
What’s wrong with, as Mitch says, the Opposition Leader standing up for people with mortgages? The banks are big enough aren’t they…
ARBIB:
No, that was…
GILBERT:
…to look after themselves?
ARBIB:
Well the point about that was, in the end, we’ve got a crisis, a banking crisis, and if you want to defend the system, if you want to ensure that we get through this well you’ve got to be responsible. Malcolm Turnbull has shown he’s not going to be responsible. Malcolm Turnbull has shown he’s in it for the populist cheap thrills in the media.
FIFIELD:
No.
GILBERT:
You say that it’s all about bipartisanship but on the one hand, Malcolm Turnbull is saying we support all of these things, but as Mark said, on the rates and other issues it’s not there. So does it have as much credibility if you take bipartisanship on one day and issue and not the next?
FIFIELD:
Malcolm was showing in relation to the rate cut that you can walk and chew gum at the same time. You can support a strong banking system but also argue in favour of people with mortgages. In relation to the broader point of bipartisanship, we’ve offered that. Malcolm Turnbull has written to the Prime Minister offering to sit down to work together on those areas where…
GILBERT:
Doesn’t that sound hollow though?
FIFIELD:
Not at all…
GILBERT:
I mean chopping and changing…
FIFIELD:
No it’s not chopping and changing at all. We’ve offering bipartisanship. We’ve shown it in relation to the announcement made by the Prime Minister at the weekend. But bipartisanship doesn’t mean that an opposition stops doing its job of providing scrutiny. It doesn’t mean that the Opposition stops scrutinising legislation in the Senate. You can still be a good opposition, making constructive criticisms, critiquing what the government is doing, but offering support on significant policy matters and that’s what we’re offering.
ARBIB:
The real test for Malcolm Turnbull is this. At the moment they are blocking $4.2 billion worth of revenue in the Senate. If he is serious about bipartisanship, if he is serious about putting aside his own political interest for the country, then he will go to his caucus room, go to his party room and argue to let that money through so we can get some certainty, some certainty…
GILBERT:
Before we go on let’s just hear from the man himself, Malcolm Turnbull, let’s hear what he said yesterday.
MALCOLM TURNBULL:
That’s a very important step and we will undertake to give the Government every assistance in ensuring that the necessary legislation is passed through the Parliament promptly.
GILBERT:
So Mitch, as you’ve articulated this morning, Mr Turnbull, your Leader, saying that this support mechanism, this new initiative for the banking system and deposits will be supported 100% by your side of politics.
FIFIELD:
Absolutely. We’ll give that the quickest passage we possibly can through the Parliament. Just picking up the point that Mark was saying about revenue measures which the Opposition oppose in the Senate. We need to be stimulating the economy. Labor’s proposed a raft of new taxes and higher taxes. We should be looking at tax cuts not tax rises. So as I say, we’ll certainly support the Government on those things which are in the national interest such as the Prime Minister’s announcement at the weekend. But where Labor are pursuing policies which are actually against the interests of the economy, such as new and higher taxes, then we’ll certainly oppose those.
GILBERT:
Well why not, just getting back to the Turnbull position on bipartisanship, why not get him around the table? He clearly knows what he’s on about, I mean he’s pre-empted your decision on increasing the bank deposit guarantee, he’s also pre-empted the Government’s decision in terms of putting more liquidity into the, for non bank lenders. Why not get him around the table?
ARBIB:
My understanding is that Ken Henry is going to give him a brief in terms of where the economy’s up to and where the package is up to. But in the end this is a time for governments. This is a time for governments to be taking the decisions. That’s what Kevin Rudd’s doing. And I’m glad Mitch raised the point about spending and stimulatory effects and tax cuts because at the moment the Opposition is holding up a $1,200 tax cut for something like 330,000 people through the Medicare surcharge. So…
FIFIELD:
That will lead to premium increases.
ARBIB:
…Mitch I hope you walk into the Senate I hope you walk into the Senate and ensure you vote with us on that one mate.
FIFIELD:
Premium rises for private health insurance holders.
ARBIB:
A tax cut for families.
GILBERT:
There’s another point Malcolm Turnbull made yesterday. I want to play that to you now and get both of your thoughts on it.
TURNBULL:
This emissions trading scheme, the rushed introduction of it is causing considerable uncertainty right through the Australian community and particularly with business. And we’d recommend to the Prime Minister that he take the better advice that he’s getting from the business community and from other sources within government and postpone the introduction of any emissions trading scheme until we are fully informed of the global response which cannot be until the end of next year.
GILBERT:
Senator Arbib are you worried that message will gain resonance as this crisis continues? Why not delay the year? If the first couple of years are low in their trajectories and their targets, why not give the business community another year to get through this storm?
ARBIB:
Well the thing that Malcolm Turnbull said right at the start of his comments there were uncertainty. And today you’ve seen, I think it’s the Business Council and the Minerals Council come out and say, “look go forward with this. We don’t need any more uncertainty.” Putting this off into the nether nether will provide huge uncertainty for business and that’s why we’ve got to take the decision now. It’s our ambition 2010, really while this economic crisis will be around for years, the effects of climate change will be around forever. So in the end, if we get the trajectory right, if we get the package right, the framework right, then we’ll provide certainty for business and also consumers. And again it’s a good opportunity for us to actually move forward with our economy and actually make reforms that position us for the future. Get us into those green jobs. Get us into the high end. We’ve seen the dollar crash down around 68 cents and a large part of that is about we are so dominated by our raw materials and our exports of raw materials, it’s time to actually move up a level. I mean we’ve got to start getting straight at the next level in terms of production
GILBERT:
Mitch, if the Government does start with a low trajectory and low targets, why not give the business community the certainty that Mark was just talking about?
FIFIELD:
Well there were other business groups out this morning saying we should delay the introduction of an ETS. And if this financial crisis is, as the Prime Minister says, the equivalent of a rolling series of national security issues, then we should look at some of these issues on a bipartisan basis. The Prime Minister should take up the Opposition Leader’s offer to sit down and talk through some of these issues and the ETS I think is one of those issues.
GILBERT:
Okay well let’s have a quick break and after it we’ll get the two senators’ view on the latest in the race for the white house.
Break
Welcome back to AM Agenda and our panel Labor Senator Mark Arbib and Liberal Senator Mitch Fifield. Gentleman I want to get your thoughts on the fascinating race for the white house. We’re now only three weeks away. Mark the Democratic candidate is now eleven points ahead according to some polls. Is this done and dusted?
ARBIB:
Well I’d say it’s his to lose. He’s in a very dominant position. The polls are sort of shifting. There was one poll that said eleven points, there was a poll overnight for the last three days which is saying seven points and a tightening. So we’ll have to see. But definitely he’s campaigning in Republican states which really have never been on the radar. He’s campaigning at the moment, Obama, in Virginia, he’s campaigning in North Carolina. And if he’s campaigning in safe Republican territory like that it has to show that he’s on the march. And what that will force, that will force McCain to have to withdraw resources out of some of the seats he’s targeting and go back to his heartland and keep campaigning there.
GILBERT:
That’s true isn’t it Mitch? If you’ve got the Democratic candidate in Republican heartland, it says probably more than the polls say in the sense that they’re obviously very confident and it’s going to get the McCain campaign to re-direct their resources.
FIFIELD:
That’s right, their polling is clearly telling them something and they’re taking an offensive approach which shows a great deal of confidence. I think one of the pities of this campaign is that the economic crisis, obviously that’s an awful thing in itself, but that it is distracting the American people from looking at the presidential campaign in the way that they might usually. So I think that’s a bit of a pity. What John McCain needs to do is get back on to talking about the economy because clearly that is the issue.
GILBERT:
But it’s not the issue that the Republicans have as a strength given that it’s a Bush Administration under which this crisis emerged. So it’s a weakness in many respects isn’t it?
FIFIELD:
Well you can’t help but talk about what is the predominant issue in the election campaign and I think the Republicans would be well advised to keep talking about it.
GILBERT:
Is that the thing that you think will, at the end of the day, cost them?
FIFIELD:
If John McCain wins it’d be a fresh administration. You don’t have the continuity that we have in the Australian political system where if a government wins or if a party wins they continue on. I don’t think he’s got any option but to talk about the economy.
ARBIB:
Can I just say, the crisis has brought to the attention of the Americans the connection between Bush and McCain. But what’s been going on in the US for a long period of time now is they’ve got an economic downturn and they’re heading for a recession and they are feeling it in the pocket. It is very very tough times over there. There are huge numbers of job cuts, trouble for businesses actually getting loans. So I mean they’re feeling it in the pocket, they know it’s the Republicans who’ve governed during this period, they’ve put them in this situation and they’re gonna punish them.
GILBERT:
Those big swing states, the mid-west states where there’s the blue-collar vote so important as well. But what about this idea, this theory known as the Bradley Effect. Basically the LA Mayor in 1982, Tom Bradley, a black candidate, ran for the Governor of California, he led by seven points ahead of the election day and lost. They call it the Bradley Effect in the United States where white voters might say “yes, we’ll vote for the black candidate.” But on the day of the election they don’t. Do you think that that’s a big risk? That race is the lingering issue that could cost Obama this election?
ARBIB:
Look race in United States elections is always the, the big sort of question mark and political parties use it to score points and that’s where the Republicans in terms of their wedge politics always play the dangerous game with race over there. It’s very hard to tell what effect it’ll have on this campaign. What I do hope as a big Obama fan though is, a campaign that’s been going on for something like two years if you factor in all the primaries, so I think voters now would be very very comfortable in their decision-making one way or another and have factored it in. So I hope it won’t have an effect and I hope that Obama will push forward.
GILBERT:
We’re almost out of time Mitch, but in 20 seconds or less, it’s obviously a very complex issue, your thoughts on it?
FIFIELD:
I’m no particular fan of Obama but I do hope that America is colour-blind and that race isn’t a factor. The other interesting variable, of course, is that in the US it’s voluntary voting and that’s a variable which is always hard to take into account. How many people will turn out to vote from both sides. That’s the big unknown.
GILBERT:
Gentlemen as always thank you very much for your time and your thoughts.
ARBIB:
Thank you.
FIFIELD:
Thank you Kieran.
ENDS